Benoy Krishna Bose Vs. Commercial Tax Officer and ors. - Court Judgment

B.N. Banerjee, J.

1. The point involved in this Rule is a short but interesting point. The petitioner carries on business as a small scale manufacturer of soap, under the trade name Messrs Hindusthan Chemical Corporation. In the said business, the petitioner says, he manufactures the following kinds of soap: (1) toilet soap, (2) washing soap, (3) tablet soap, (4) shaving soap, (5) medicated soap, (6) liquid soap, (7) soft soap, (8) soap chips or flakes and (9) powdered soap.

2. Originally the petitioner was registered as a dealer under the Bengal Finance (Sales Tax) Act, 1941. Before the passing of the West Bengal Sales Tax Act, 1954, he was liable to pay sales tax on soaps manufactured by him under the provisions of the Bengal Finance (Sales Tax) Act, 1941. After the West Bengal Sales Tax Act, 1954, came into operation, the State Government published the following notification:-

No. 2346 F.T.-1st December, 1954.-Whereas the Governor is of opinion that it would be in the public interest that the commodity mentioned below, being a commodity liable hitherto to taxation under the Bengal Finance (Sales Tax) Act, 1941 (Bengal Act VI of 1941), should be taxed under the West Bengal Sales Tax Act, 1954 (West Bengal Act IV of 1954).

Now, therefore, in exercise of the power conferred by Section 25 of the West Bengal Sales Tax Act, 1954 (West Bengal Act IV of 1954), the Governor is pleased hereby to specify such commodity under that section.

The commodity referred to above-Soap, which expression shall mean-(1) toilet soap, (2) washing soap, (3) tablet soap, (4) shaving soap, (5) medicated soap, (6) soft soap, (?) liquid soap, (8) soap chips or flakes, (9) powdered soap or (10) soap of any other description whatsoever, whether or not similar in kind to those mentioned in items (1) to (9) above, but shall not include-

(a) jute batching emulsifier, or

(b) soap manufactured, made or processed otherwise than in a factory as denned in the Factories Act, 1948 (LXIII of 1948).

3. According to the petitioner, with the making of the notification he had no further liability to pay sales tax under the Bengal Finance (Sales Tax) Act but could be taxed, if at all, under the West Bengal Sales Tax Act.

4. Nevertheless, the respondent-Commercial Tax Officer, Shyambazar Charge, continued to call upon the petitioner to submit returns under the Bengal Finance (Sales Tax) Act. One such notice called upon the petitioner to furnish returns under the Bengal Finance (Sales Tax) Act for the four quarters ending on the last day of Chaitra 1365 B. S. (annexed to the petition and marked with letter 'A'). By the said notice the petitioner was called upon to appear before the Commercial Tax Officer on 22nd April, 1963, with his books of account. The petitioner did not comply with the notice. Thereupon the respondent-Commercial Tax Officer made a best judgment assessment upon the petitioner and by a notice in Form VII informed the petitioner that there was an assessment of Rs. 2,401.41 nP. made upon him for the four quarters ending on the last day of Chaitra 1365 B.S. and further that there was a penalty of Rs. 100 imposed upon him under Section 11(1) of the Bengal Finance (Sales Tax) Act.

5. Aggrieved by the notice and the order of assessment the petitioner moved this Court under Article 226 of the Constitution praying for a writ of certiorate for the quashing of the notices calling upon the petitioner to submit returns or the notice informing the petitioner about the result of the best judgment assessment and for a writ of mandamus directing the respondents not to give effect to the notices in Form VI or the assessment order and obtained this Rule.

6. Dr. Debi Prosad Pal, learned Advocate for the petitioner, submitted that there was no denial, in the affidavit-in-opposition, that the petitioner was a manufacturer of the types of soap which were covered by the notification under the West Bengal Sales Tax Act, quoted above. He, therefore, submitted that the respondent-Commercial Tax Officer had no jurisdiction to include the sale proceeds of those items in the total turnover of the petitioner and to assess him under the Bengal Finance (Sales Tax) Act.

7. Mr. Nirmal Chandra Chakravarti, learned Advocate for the respondents, tried to repel this contention with the following arguments. He strongly relied upon a part of paragraph 2 of the petition, which reads as follows :

Your petitioner does not manufacture, make or process the soap in a factory as defined in the Factories Act, 1948, but is a small scale manufacturer of the soap of the categories referred to in the earlier paragraph.

8. Relying on the aforesaid portion of paragraph 2 of the petition, Mr. Chakravarti contended that soaps manufactured, made or processed othewise than in a factory did not fall to be covered by the notification and as such although the petitioner was manufacturer of the types of soap described in the notification, he would not get the advantage of the notification, because he did not manufacture those types of soap in a factory.

9. In my opinion, this argument is unworthy of being upheld. Soaps as described in items Nos. (1) to (9) of the notification, whether manufactured in a factory or not, are all exempt from the operation of the Bengal Finance (Sales Tax) Act, 1941. So far as item No. (10) of the notification is concerned, which I have already quoted, there is an exception made to this effect that jute batching emulsifier and other description of soaps not manufactured in a factory shall not come under item (10) of the notification. That being my reading of the notification, the argument advanced by Mr. Chakravarti cannot be upheld. The position, therefore, is that the Commercial Tax Officer attempted to include, in the total turnover, items of goods which were covered by the notification under the West Bengal Sales Tax Act and in so doing exceeded his jurisdiction. The impugned notice calling upon the petitioner to submit returns and the impugned assessment order must, therefore, be quashed.

10. Before I close this judgment, I need notice a minor point urged by Mr. Chakravarti. He argued that the assessment order was not annexed to the petition but only the notice of demand of tax was annexed. He submitted that in the absence of the assessment order, I should not quash the assessment order itself. Mr. Chakravarti is right to this extent that the petition is defective in so far as it did not annex the assessment order. But since there is no dispute that an assessment was made upon the petitioner, including in the gross turnover the sale price of the goods mentioned in the notification under the West Bengal Sales Tax Act, and a sum was demanded of the petitioner by way of sales tax, I do not make much of this technical defect.

11. In the result, I quash the notice and the impugned order of assessment and restrain the respondents from giving effect thereto. Let a writ of certiorari accordingly issue.

12. I make no order as to costs in this Rule.

13. It is stated that the petitioner has already paid the amount assessed under the impugned assessment order. Now that I have quashed the assessment order, the petitioner is at liberty to take proceedings for the refund of the money.